EXHIBIT 10.17
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (the "Agreement") is entered into by
and between Infonet Services Corporation, a Delaware Corporation (the "Company")
and Xxxxx X. Xxxxxxx, an individual (the "Executive").
WITNESSETH:
WHEREAS the Board of Directors has resolved that it is in the best interest
of the Company that its officers be subject to the terms of an executive
employment agreement; and
WHEREAS the Company and the Executive now desire to enter into this
Agreement and set forth the terms and conditions of the Executive's employment.
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual
promises and covenants set forth below and other good and valuable
consideration, receipt of which is hereby acknowledged, the Company and the
Executive do hereby agree as follows:
ARTICLE I
EMPLOYMENT
The Company hereby employs the Executive to perform the duties and
responsibilities normally associated with the position of Vice President and
Chief Financial Officer, or such other position to which the Executive may be
promoted, for the term of this Agreement. Executive shall report directly to the
Chief Executive Officer of the Company. The Executive agrees to abide by the
Company's Certificate of Incorporation, its By-Laws and the direction by its
Board of Directors except to the extent such direction would be inconsistent
with applicable law.
ARTICLE II
REMUNERATION
For the first year of this Agreement, the Executive shall be paid his Base
Salary in effect as of April 24, 2001. The Executive's Base Salary shall
thereafter be reviewed annually in accordance with the Company's then existing
salary review policies. The Executive shall also be entitled to receive and be
eligible to participate in those Benefits made available by the Company during
the term of this Agreement.
ARTICLE III
TERM AND TERMINATION OF AGREEMENT
Section 3.1 Term and Expiration of Agreement
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This Agreement shall be effective commencing on April 24, 2001 and shall
continue in effect for an initial period of 36 months ("Initial Term") and shall
thereafter be extended without further action of the parties for additional
periods of 24 months ("Extended Term") unless the Executive receives notice from
the Company not later than 24 months prior to the last day of such Initial Term
or any Extended Term of its election not to extend the Agreement. The last day
of the Initial Term or any such Extended Term shall hereinafter be referred to
as the "Expiration Date."
Section 3.2 Death or Disability
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The Company may terminate this Agreement without any further obligation
(except as provided in this Section 3.2) to the Executive on the Death or
Disability of the Executive. If the Executive's Death or Disability occurs in
the course or as the result of the performance of his duties under this
Agreement, however, the Executive's Base Salary shall continue to be paid to the
Executive's estate or the Executive for a period of two (2) years from the date
of Death or Disability and all unvested options granted to the Executive shall
vest immediately and be exercisable for the remainder of their original term.
Nothing in this Section 3.2 is intended to effect the entitlement of the
Executive or his estate to any payments or benefits to which he or it would
otherwise be entitled under any other Company plan or program.
Section 3.3 Termination for Cause
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The Company may terminate this Agreement at any time for Cause without any
further obligation to the Executive.
Section 3.4 Retirement
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In the event that the Executive voluntarily elects Retirement during the
term of this Agreement, the Executive shall be entitled to the benefits under
the Company's regular Retirement program, or, if a separate Retirement agreement
has been entered into between the Executive and the Company, benefits shall be
provided according to the terms of that agreement.
Section 3.5 Resignation
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The Executive is entitled to voluntarily resign his employment with the
Company during the term of this Agreement. If the Executive resigns his
employment with the Company for other than Good Reason, this Agreement shall be
deemed terminated without any further obligation of the Company to the
Executive.
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Section 3.6 Termination Without Cause (The "Early Termination Option")
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The Company has the right to terminate the Executive's employment, without
Cause, at any time prior to the Expiration Date by providing the Executive with
a Notice of Termination and, receipt of which, shall cause the Company to pay
the Executive the Separation Payments for the applicable period set forth in
Section 3.9 (the "Early Termination Option").
Section 3.7 Resignation for Good Reason
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The Executive shall be entitled to resign his employment with the Company
for Good Reason at any time prior to the Expiration Date and receive the
Separation Payments for the applicable period set forth in Section 3.9 by
providing the Company with a Notice of Termination. The fact that the Executive
may choose not to resign his employment for Good Reason after the occurrence of
any event constituting Good Reason shall in no way affect the Executive's right
to do so upon the occurrence of a subsequent transaction or event which
constitutes a Good Reason.
Section 3.8 Stock Options
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Upon termination of the Executive's employment by Executive for Good
Reason, by the Company without Cause or by Death or Disability, all of
Executive's vested options shall continue to be exercisable for their original
term. The provisions of this Section 3.8 shall survive the expiration of this
Agreement and shall be separately provided for in the relevant option agreement
with Executive provided in connection with the option grant.
Section 3.9 Separation Payments
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(a) In the event the Early Termination Option is exercised by the Company
or the Executive resigns his employment with the Company for Good Reason, the
Executive shall be entitled to receive Separation Payments through the
Expiration Date or for a period of two (2) years from the effective date of the
Executive's termination or resignation, whichever period is longer, and all
unvested options granted to the Executive shall vest immediately and be
exercisable for the remainder of their original term.
(b) Unless otherwise agreed by the Company and Executive, the Separation
Payments shall be paid or provided on a continuing monthly basis on the first
business day of each month commencing with the month immediately following the
effective date of the Executive's termination or resignation, whichever is
applicable.
(c) Upon the exercise of the Early Termination Option by the Company or
the Executive's resignation for Good Reason, the Executive shall remain eligible
for and shall be entitled to accrue Benefits (other than the accrual of vacation
time) during the period the Executive receives or is entitled to receive
separation payments.
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(d) The Company shall use the compensation which the Executive receives or
is entitled to receive as Separation Payments for the purpose of determining the
amount of any benefit to which the Executive may be entitled under any plan or
program.
(e) The Executive agrees that so long as he is receiving Separation
Payments, he shall not become employed by or consult with any company whose
primary business is the provision of public international value added network
services.
(f) The Executive agrees that so long as he is receiving Separation
Payments, he shall not induce or solicit any employee of the Company to
terminate his or her employment with the Company for any purpose.
(g) The Company's obligation to pay the Separation Payments and otherwise
comply with the provisions of this Section 3.9 shall be unconditional. The
Executive shall not be required to mitigate the amount of any payment provided
for in this Section 3.9.
ARTICLE IV
CONFIDENTIAL INFORMATION
Section 4.1 Confidential Business Information
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The Executive agrees that he shall hold in strictest confidence and not
disclose, directly or indirectly, to any person, firm or corporation, without
the express prior written consent of the Company, any trade secrets or any
confidential business information of the Company including, but not limited to,
corporate planning, production, distribution or marketing processes;
manufacturing techniques; customer lists or customer leads; marketing
information or procedures; development work; work in process; financial
statements or notes, schedules or supporting financial data; or any other secret
or confidential matter relating to the products, sales or business of the
Company.
Section 4.2 Return of Information
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The Executive agrees that no later than five (5) days after his employment
is terminated with the Company he will deliver to the Company and will not keep
in his possession or deliver to anyone else, any and all drawings, notes,
memoranda, specifications, financial statements, customer lists, product
surveys, data, documents or other material containing or disclosing any of the
matters referred to in Section 4.1 above.
Section 4.3 Remedy for Breach of this Article
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The Executive acknowledges that any breach of this Article IV by him will
cause irreparable injury to the Company for which the available remedies at law
will not be adequate. Accordingly, in the event of any such breach or threatened
breach of any provision of this Article, in addition to any other remedy
provided by law or in equity, the Company shall be entitled to appropriate
injunctive relief, in any court of competent jurisdiction, restraining the
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Executive from any such actual or threatened breach of this Article. The
Executive stipulates to the entry against him of any such temporary, preliminary
or permanent injunction and agrees not to resist the Company's application for
such equitable relief, except on the grounds that the acts or omissions alleged
by the Company did not violate any of the provisions of this Article.
ARTICLE V
DEFINITIONS
Whenever the following terms are used below in this Agreement, they shall
have the meaning specified below, and no other, unless the context clearly
indicates to the contrary. The masculine pronoun shall include the feminine and
neuter, and the singular the plural, where the context so indicates.
Section 5.1 Base Salary
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"Base Salary" shall mean the Executive's regular annualized rate of pay
exclusive of all other Benefits as that term is defined below.
Section 5.2 Benefits
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"Benefits" shall mean Benefits pursuant to this contract and all employee
welfare and pension benefit plans or programs and all other plans or programs
including, but not limited to medical and dental insurance, stock incentive
plans, 401(k) plans and matching Company contributions, bonus and incentive
compensation plans, vacation plans, etc. which the Executive or employees of the
Company, and, in particular, employees with senior management responsibility,
are eligible for and entitled to participate in, whether now in effect or added
during the term of this Agreement.
Section 5.3 Cause
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"Cause" shall mean (i) the Executive's conviction of a felony or a
misdemeanor involving moral turpitude or (ii) the Executive's willful breach or
the habitual neglect of his duties under this Agreement which have a material
adverse impact on the financial condition of the Company; provided, however,
that the Company shall first have given the Executive written notice of the
alleged breach or areas of neglect and a reasonable opportunity to cure.
Section 5.4 Change in Control
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A "Change in Control" shall be deemed to have occurred if (i) 20% or more
of the Company's outstanding securities owned by the beneficial owners of Class
A stock of the Company (the "Class A Stockholders") as of April 24, 2001 are
sold, transferred or otherwise alienated; or (ii) after the condition in
subsection (i) is satisfied, any additional securities of the Company are sold,
transferred or otherwise alienated from time to time by any entity which is a
Class A Stockholder as of the date hereof; or (iii) the stockholders of the
Company approve a merger or consolidation of the Company with any other
corporation or entity regardless of which
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entity is the survivor, other than a merger or consolidation which would result
in the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or being converted into
voting securities of the surviving entity) at least 80% of the combined voting
power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation; or (iv) the
stockholders of the Company approve a plan of complete liquidation or winding-up
of the Company or an agreement for the sale or disposition by the Company of all
or substantially all of the Company's assets; or (v) if the director nominees of
three or more members of the Class A Stockholders are not elected; or (vi) any
event which the Board of Directors determines should constitute a Change in
Control.
Section 5.5 Disability
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"Disability" shall mean the Executive's absence from performance of his
assigned duties for the Company on a full-time basis for six consecutive
calendar months as a result of incapacity due to medically documented physical
or mental illness and which, in the opinion of the Executive's physician, makes
it impossible for the Executive to perform his duties and responsibilities under
this Agreement.
Section 5.6 Good Reason
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"Good Reason" shall mean the occurrence of any of the following events
without the Executive's express written consent:
(a) the assignment to the Executive of duties inconsistent with the
position and status of the Executive as set forth in Article 1, a substantial
alteration in the nature or status of the Executive's responsibilities (other
than any such alteration primarily attributable to a medical or physical
infirmity of the Executive which the Company has attempted to accommodate); or
(b) the failure to pay or a reduction by the Company in the Executive's
Base Salary as the same may be increased from time to time during the term of
this Agreement or the Company's failure to increase (within 12 months of the
Executive's last increase in Base Salary) the Executive's Base Salary in an
amount which at least equals, on a percentage basis, the average percentage
increase in Base Salary for all key management employees within the Company; or
(c) the elimination or reduction by the Company of any of the Benefits to
which the Executive is eligible for an entitled to participate in, whether now
in effect or added during the term of this Agreement or the failure of the
Company to provide the Executive with Benefits or facilities at least comparable
to those Benefits or facilities made available to other key management employees
within the Company; or
(d) a Change in Control; or
(e) any purported termination of the employment of the Executive by the
Company which is not effected according to the requirements of this Agreement.
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Section 5.7 Notice of Termination
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"Notice of Termination" shall mean a notice, in writing, to the
Executive from the Company or to the Company from the Executive, which states
the decision of the Company or the Executive to terminate the Executive's
employment and which (i) indicates the specific termination provision enumerated
in this Agreement relied upon, (ii) sets forth in reasonable detail the facts
and circumstances alleged to provide a basis for termination of the Executive's
employment by the Company or by the Executive and (iii) states the effective
date of the termination which shall not be less than thirty (30) days nor more
than sixty (60) days from the date of the Notice of Termination. Such notice
must be communicated to the Executive or to the Company in accordance with
Section 6.4 herein.
Section 5.8 Retirement
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"Retirement" shall mean termination of the Executive's employment on
or after the date on which the Executive attains an age and years of service
which entitles him to retire in accordance with any Retirement plan or program
provided by the Company or agreement entered into between the Executive and the
Company.
Section 5.9 Separation Payments
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"Separation Payments" shall mean for the Executive: (i) the average
annual total monetary consideration received from the Company during the twelve
(12) month period immediately preceding the effective date of his termination or
resignation and (ii) the continuation of his Benefits (other than the accrual of
vacation time).
ARTICLE VI
MISCELLANEOUS
Section 6.1 Action to Challenge or Enforce Agreement
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Should either (i) the Company, its successors or assigns, or any
person acting on behalf of the Company seek to challenge this Agreement or any
of its terms in any action or legal proceeding or (ii) the Executive seek to
enforce this Agreement or any of its terms in any action or legal proceeding,
the Company shall reimburse the Executive for all costs and attorneys' fees
incurred in connection with any such action or proceeding.
Section 6.2 Successors; Binding Agreement
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The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had
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taken place. The failure of the Company to obtain such assumption agreement
prior to the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled to
hereunder if the Executive had resigned his employment for Good Reason.
Section 6.3 Successors and Assigns
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This Agreement shall inure to the benefit of, and be enforceable by,
the personal or legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees of the Executive.
Section 6.4 Notice
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Notices and all communications provided for in this Agreement shall be
in writing and shall be deemed to have been received when delivered or mailed by
United States registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth at the end of this Agreement,
provided that all notices to the Company shall be directed to the attention of
the President with a copy to the Secretary of the Company, or to such other
address as either party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon
receipt.
Section 6.5 Taxes
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(a) It is expressly understood and agreed by and between the Company
and the Executive that the Executive shall only be responsible for ordinary
income taxes should he receive payments under this Agreement (including, without
limitation, separation payments). Any other excise taxes, penalties, interest or
other payments which the Executive may be required to pay by any taxing
authority shall be borne by the Company.
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(b) Anything in this Agreement to the contrary notwithstanding, if it
shall be determined that any payment or distribution to Executive or for his
benefit (whether paid or payable or distributed or distributable) pursuant to
the terms of this Agreement or otherwise (the "Payment") would be subject to the
excise tax imposed by section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code") (the "Excise Tax"), then Executive shall be entitled to
receive from the Company an additional payment (the "Gross-Up Payment") in an
amount such that the net amount of the Payment and the Gross-Up Payment retained
by Executive after the calculation and deduction of all Excise Taxes (including
any interest or penalties imposed with respect to such taxes) on the Payment and
all federal, state and local income tax, employment tax and Excise Tax
(including any interest or penalties imposed with respect to such taxes) on the
Gross-Up Payment provided for in this Section 6.5 and taking into account any
lost or reduced tax deductions on account of the Gross-Up Payment, shall be
equal to the Payment.
(c) All determinations required to be made under this Section 6.5,
including whether and when the Gross-Up Payment is required, the amount of such
Gross-Up Payment, and the assumptions to be used in arriving at such
determinations shall be made by the Accountants (as defined below) which shall
provide Executive and the Company with detailed supporting calculations with
respect to such Gross-Up Payment within fifteen (15) business days of the
receipt of notice from Executive or the Company that Executive has received or
will receive a Payment. For the purposes of this Section 6.5, the "Accountants"
shall mean the Company's independent certified public accountants serving
immediately prior to the Change in Control (as defined in this Agreement). In
the event that the Accountants are also serving as accountants or auditors for
the individual, entity or group effecting the Change in Control, Executive shall
appoint another nationally recognized public accounting firm to make the
determinations required hereunder (which accounting firm shall then be referred
to as the Accountants hereunder). All fees and expenses of the Accountants shall
be borne solely by the Company.
(d) For the purposes of determining whether any of the Payments will
be subject to the Excise Tax and the amount of such Excise Tax, such Payments
will be treated as "parachute payments" within the meaning of section 280G of
the Code, and all "parachute payments" in excess of the "base amount" (as
defined under section 280G(b)(3) of the Code) shall be treated as subject to the
Excise Tax, unless and except to the extent that in the opinion of the
Accountants such Payments (in whole or in part) either do not constitute
"parachute payments" or represent reasonable compensation for services actually
rendered (within the meaning of section 280G(b)(4) of the Code) in excess of the
"base amount," or such "parachute payments" are otherwise not subject to such
Excise Tax. For purposes of determining the amount of the Gross-Up Payment,
Executive shall be deemed to pay Federal income taxes at the highest applicable
marginal rate of federal income taxation for the calendar year in which the
Gross-Up Payment is to be made and to pay any applicable state and local income
taxes at the highest applicable marginal rate of taxation for the calendar year
in which the Gross-Up Payment is to be made, net of the maximum reduction in
federal income taxes which could be obtained from the deduction of such state or
local taxes if paid in such year (determined without regard to limitations on
deductions based upon the amount of Executive's adjusted gross income), and to
have otherwise allowable deductions for federal, state and local income tax
purposes at least equal to those disallowed because of the inclusion of the
Gross-Up Payment in Executive's adjusted gross income.
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(e) To the extent practicable, any Gross-Up Payment with respect to
any Payment shall be paid by the Company at the time Executive is entitled to
receive the Payment and in no event will any Gross-Up Payment be paid later than
five days after the receipt by Executive of the Accountant's determination. Any
determination by the Accountants shall be binding upon the Company and
Executive. As a result of uncertainty in the application of section 4999 of the
Code at the time of the initial determination by the Accountants hereunder, it
is possible that the Gross-Up Payment made will have been an amount less than
the Company should have paid pursuant to this Section 6.5 (the "Underpayment").
In the event that the Company exhausts its remedies pursuant to this Section 6.5
and Executive is required to make a payment of any Excise Tax, the Underpayment
shall be promptly paid by the Company to the Executive or to the relevant taxing
authority at the Company's discretion.
(f) Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable after Executive is informed in writing of such claim and shall
apprise the Company of the nature of such claim and the date on which such claim
is requested to be paid. Executive shall not pay such claim prior to the
expiration of the 30-day period following the date on which Executive gives such
notice to the Company (or such shorter period ending on the date that any
payment of taxes, interest and/or penalties with respect to such claim is due).
If the Company notifies Executive in writing prior to the expiration of such
period that it desires to contest such claim, Executive shall:
(1) give the Company any information reasonably requested by the
Company relating to such claim;
(2) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected by
the Company;
(3) cooperate with the Company in good faith in order to effectively
contest such claim; and
(4) permit the Company to participate in any proceedings relating to
such claims;
provided, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify Executive for and hold
Executive harmless from, on an after-tax basis, any Excise Tax or income tax
(including interest and penalties with respect thereto) imposed as a result of
such representation and payment of all related costs and expenses. Without
limiting the foregoing provisions of this Section 6.5, the Company shall control
all proceedings taken in connection with such contest and, at its sole option,
may pursue or forgo any and all administrative appeals, proceedings, hearings
and conferences with the taxing authority in respect of such claim and may, at
its sole option, either direct Executive to pay the tax claimed and xxx for a
refund or contest the claim in any permissible manner, and Executive agrees to
prosecute such contest to a determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company directs
Executive to pay such claim and xxx for a refund, the Company shall advance the
amount of such payment to Executive, on an interest-free basis, and shall
indemnify Executive for and
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hold Executive harmless from, on an after-tax basis, any Excise Tax or income
tax (including interest or penalties with respect thereto) imposed with respect
to such advance or with respect to any imputed income with respect to such
advance (including as a result of any forgiveness by the Company of such
advance); provided, further, that any extension of the statute of limitations
relating to the payment of taxes for the taxable year of Executive with respect
to which such contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be payable
hereunder and Executive shall be entitled to settle or contest, as the case may
be, any other issue raised by the Internal Revenue Service or any other taxing
authority.
Section 6.6 No Waiver
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No provision of this Agreement may be modified, waived or discharged
unless in writing and signed by the Executive and such officer of the Company as
may be specifically designated or authorized by the Board of Directors or by a
Committee of the Board of Directors. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time.
Section 6.7 Entire Agreement
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This Agreement represents the sole and Entire Agreement among the
parties and supersedes all prior agreements, negotiations, and discussions
between the parties hereto and/or their representatives. Any amendment to this
Agreement must be in writing specifically referring to this Agreement and signed
by duly authorized representatives of all of the parties hereto.
Section 6.8 Controlling Law
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The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Delaware.
Section 6.9 Invalid Provision
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The invalidity or unenforceability of any provisions of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
Section 6.10 No Attack on Agreement
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This Agreement shall not be subject to attack on the ground that any
or all of the legal theories or factual assumptions used for negotiating
purposes are for any reason inaccurate or inappropriate. The parties agree that
the language of this Agreement shall not be construed for or against any
particular party.
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Section 6.11 Confidentiality
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The Executive agrees to keep confidential and not disclose any of the
terms of this Agreement to any person (including, but not limited to, any
current or former employees of the Company) other than his attorneys and/or tax
advisors unless required to do so by law.
Section 6.12 Counterparts
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This Agreement may be executed in several counterparts, each of which
shall be deemed to be an original, and all such counterparts together shall
constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth below.
INFONET SERVICES CORPORATION, Xxxxx X. Xxxxxxx
a Delaware corporation
By: _____________________________ __________________________________
Xxxx X. Xxxxxxx
Chairman, CEO and President
Address: Address:
Infonet Services Corporation Infonet Services Corporation
0000 Xxxx Xxxxx Xxxxxx 0000 Xxxx Xxxxx Xxxxxx
Xx Xxxxxxx, Xxxxxxxxxx 00000-0000 Xx Xxxxxxx, Xxxxxxxxxx 00000-0000
Date: April 24, 2001 Date: April 24, 2001
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